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G Gurumurthy

The Finnish group is expected to choose either Gujarat or Maharashtra to locate the plant.

Coimbatore , Sept. 3

THE first foreign direct investment project in India's paper industry may blossom through a Finland company which has proposed to set up a four-lakh-tonne per annum capacity plant in the Western region to manufacture newsprint.

The Finnish group, which has paper plants across many countries including a few units in China, is expected to choose either Gujarat or Maharashtra to locate the plant, estimated to cost somewhere around $250 million (Rs 1,000 crore).

The plant will use recycled paper sourced either indigenously or from abroad for producing the newsprint.

The Central Pulp and Paper Research Institute (CPPRI) has been engaged to prepare feasibility study for the greenfield project to be set up under 100 per cent direct investment route, according to Dr A.G. Kulkarni, Director, CPPRI.

Dr Kulkarni told Business Line that the feasibility report would be ready in another two months. Once the investment decision is firmed up, the project would be through in 18 months. Dr Kulkarni refused to divulge the name of the Finnish company.

The CPPRI Director said that with quality parameters and raw material shortage hampering the domestic newsprint production, the import option will continue to remain a dominant factor in India's newsprint demand.

As against the current newsprint demand of 1.3 million tonnes a year, the domestic production is well below the halfway mark at 6 lakh tonnes. The CPPRI expects the import dependency for newsprint by the Indian user industry may continue till 2020 considering the tight raw material and technological options hampering the Indian paper plants in improving the quality in production besides meeting the stiff environmental norms laid down both for production process and handling effluent discharge.

Dr Kulkarni earlier participating at the inauguration of `Indian Paper 2005' - a four-day conference on pulp and paper industry, at the Codissia trade fair complex, said the domestic pulp and paper industry recording six per cent annual growth has to lift its production from the present six million tonnes to eight million tonnes by 2010 when the per capita consumption of paper in the country will touch 10 kg.

Confronted with limited raw material resources and technology options, its efficiency levels have to be improved if the Indian paper industry had to remain globally competitive. There is a need to enhance the waste paper recovery mechanism for the paper industry to achieve the recycling of raw material.

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